The USD/CAD is trading again near values it traversed two weeks; this as behavioral sentiment now awaits major U.S data this Thursday and Friday.
- The USD/CAD is near the 1.36775 mark as of this writing, this after the currency pair has managed to sustain lower increments attained in early trading this morning.
- The USD/CAD is also intriguingly near price ratios it traded on April the 10th. The USD/CAD had been trading near the 1.35600 vicinity two weeks ago when stronger than anticipated U.S inflation data was published.
In the ensuing two weeks the USD/CAD has seen highs get tested. The currency pair climbed to nearly 1.38470 when Jerome Powell essentially said last week that interest rates from the U.S Federal Reserve would remain in place because of stubborn inflation. The shift in sentiment had been anticipated, so while the USD did show a solid amount of strength in Forex, the USD/CAD actually started to move off the highs and begin to selloff over the past handful of days.
No Time for Bearish Celebrations in the USD/CAD
However before bearish traders start to get overly ambitious about what will happen in the near-term, they should note that technically the currency pair is at an important price level that occurred two weeks ago after key U.S Consumer Price Index numbers came in stronger than expected. The reason why this is important to consider is because tomorrow the U.S will present Gross Domestic Product reports and part of these statistics will be the GDP Price Index.
Sentiment within financial institutions remains cautious, the fact the USD/CAD has been able to return to its ‘lows’ from two weeks ago may simply prove to be equilibrium before tomorrow’s GDP numbers and Friday’s potentially important PCE Index results. If inflation comes in stronger than anticipated from these reports, the USD could muster more buying in the near-term.
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Thoughts on an Overbought USD/CAD
While it may be tempting to bet on the notion the USD/CAD remains in overbought territory, traders looking for downside momentum should be very careful and certainly not get overly ambitious. Yes, if tomorrow GDP Price Index is weaker than anticipated the USD/CAD could selloff. But before the inflation numbers hit, the short-term will be merely speculative gambling on the currency pair.
- Support levels for short-term wagers may prove to be intriguing around the 1.36740 to 1.36720 ratios.
- Resistance for the USD/CAD in the short-term may see a test around the 136840 to 1.36860 levels. If these marks can prove durable, they may allow for speculative quick hitting trades.
- Tomorrow’s price action in the USD/CAD will turn volatile before and after the U.S GDP reports are published.
Canadian Dollar Short Term Outlook:
Current Resistance: 1.36805
Current Support: 1.36750
High Target: 1.36865
Low Target: 1.36680
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